Question
Please do not post just the answer or an excel spreadsheet, please show the work and or formulas used to get the answer so I
Please do not post just the answer or an excel spreadsheet, please show the work and or formulas used to get the answer so I will properly understand how it was obtained. Thank you.
Joe and Marcia Smith of Athens, Georgia, are a married couple in their mid-30s. They have two children, ages 9 and 7. Joe and Marcia have two main savings goals. They want each of their children to have $50,000 for college. And they want to retire comfortably 30 years from now. They currently have $55,000 saved for their childrens college fund and they have $90,000 saved for retirement. Together the Smiths earn approximately $100,000 a year.
Question:
The Smiths want to have $50,000 saved for each child by the time they are ready for college. Assume, both children will be ready for college at age 18. They currently have $55,000, if this is invested and earns a 5% rate of return (compounded annually), will they meet their savings goal? The Smiths currently have $90,000 saved for retirement. How much will this be worth in 30 years, assuming a 5% rate of return (compounded annually) ? The Smiths are also planning to add an additional $5,000 a year, for the next 30 years to continue to grow their retirement fund. Assuming a 5% rate of return (compounded annually) on this money how much will they have altogether? How are the Smiths doing on meeting their savings goals? Please explain.
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